Resources on Minnesota Issues Northwest Airlines (Delta) and the State of Minnesota

This guide is compiled by staff at the Minnesota Legislative Reference
Library on a topic of interest to Minnesota legislators. It is designed
to provide an introduction to the topic, directing the user to a variety
of sources, and is not intended to be exhaustive.

Northwest Airlines, Inc. (NWA)
(which merged with Delta in 2008) began
seeking assistance from the State of Minnesota in the early 1990s. The
agreement between this privately held company and the State of Minnesota
was a result of complex and hard fought negotiations. This chronology
outlines the changing relationship between NWA and the State.

1989 JUNE: NWA agrees to sell to a group of investors including Wilson,
Checchi, KLM Royal Dutch Airlines, and others for $3.65 billion.

1989 SEPTEMBER: NWA's CEO, Steve Rothmeier and several others resign
and are replaced by Checchi and his team.

1991 MAY: Minnesota Governor Arne Carlson and Al Checchi announce
a tentative agreement for the construction of two NWA maintenance bases
in the state. Legislation passes authorizing public subsidies for NWA.

1991 DECEMBER: The Legislative Commission on Planning and Fiscal Policy
approves, by a
vote of 11-7, an $838 million financial assistance package
for Northwest. The package consists of a loan of $270 million from the
Metropolitan Airports Commission and more than $500 million in construction
financing for maintenance bases in Duluth and Hibbing. The construction
bonds are delayed by a lawsuit.

1992 MARCH: State officials sign a $761 million public financing package
for NWA. The original $838 million figure is reduced for a number of
reasons.

1992 APRIL: NWA receives the loan from the Metropolitan Airports Commission
and gives half of the $270 million to Bankers Trust, its primary lender.

1992 NOVEMBER: NWA's six unions agree in principle to accept $900
million in employee concessions over the next 3 years. NWA seeks a $300
million loan. KLM Royal Dutch Airline, a part owner of NWA, and Bankers
Trust, pledge $100 million if other lenders will commit to the rest.

1992 DECEMBER: NWA executives announce the final approval of a tentative
$2.2 billion restructuring plan that includes a $250 million emergency
loan, $340 million in debt deferral, and cancellation of $3.5 billion
in orders for new aircraft. Industry experts say that cancellation of
orders for new aircraft threatens the plans for construction of the
maintenance bases.

1993 JANUARY: The final piece of the $2.2 billion financial restructuring
plan is the concessions agreement with the unions. In return for concessions,
NWA unions demand 80 percent equity in the company. More than 1000 NWA
employees are laid off.

1993 SPRING: Concessions discussions continue between Northwest and
the various unions.

1993 JUNE: NWA warns unions that it will file for Chapter 11 bankruptcy
protection within two or three weeks if contract concessions are not
promptly approved.

1993 JULY: The Air Line Pilots Association's Master Executive Council
averts a NWA Chapter 11 bankruptcy filing by voting 24-1 on behalf of
its members to accept concessions totaling $365 million the first year.
The other unions, lenders, and vendors must agree to the restructuring
by August 1. Concessions over three years total $886 million. In exchange
for their concessions, employees get three seats on the board of directors
and up to 37.5 percent ownership of the company.

1993 AUGUST: The other five unions agree to the Air Line Pilots Association's
concessions by August 1 and $886 million worth of contract concessions
go into effect.

1993 OCTOBER: NWA announces a third-quarter profit, their first profitable
quarter in two years.

1994 MARCH: Northwest Airlines re-enters the public stock market four
and a half years after becoming a private company. The stock offering
raises $260 million.

1994 APRIL: Northwest Airlines renegotiates the agreement with Governor
Arne Carlson, U.S. Representative James Oberstar and other government
officials. The airline announces scaled-back plans to build an aircraft
maintenance base in Duluth and a reservations center in Hibbing; an
engine repair facility would not be built. The two facilities would
employ up to 954 by the year 2002.

1994 SPRING: After a tug of war between six Iron Range towns, Northwest
Airlines ticket reservations center is now slated for Chisholm.

1994 AUGUST: Northwest Airlines stock rises 50% in value.

1995 JANUARY: Northwest Airlines posts record earnings of $295 million
in 1994 after five years of losses.

1995 SUMMER: Construction begins on the aircraft maintenance base
in Duluth and the reservations center in Chisholm.

1996 JANUARY: NWA reports record earnings for 1995.

1996 APRIL: The Chisholm reservations center opens.

1996 OCTOBER: The Duluth aircraft maintenance base opens. Northwest
promises the base will employ at least 350 by the year 2000.

1997 JANUARY: NWA reports record earnings for 1996.

1997 DECEMBER: Northwest decides to send its jet engines to a French
overhaul facility. This decision permanently cancels a 1991 agreement
the airline had negotiated with Minnesota state officials to build an
engine overhaul facility in Hibbing. The original agreement unraveled
in 1992 during Northwest's financial difficulties.

1997 DECEMBER 18: Northwest retires a 1992 $45 million loan from MAC with a $39 million check.

1999 FEBRUARY: Northwest Airlines issues a report to demonstrate how
it has fulfilled its 1994 commitments to the state.

2001 SEPTEMBER: The World Trade Center tragedy and the subsequent financial implications for the airline
industry causes the state to consider assistance to Northwest Airlines. The Minnesota Senate creates the
Senate
Select Committee on Air Transportation and Economic Security "to explore state options available to assist
airlines headquartered in Minnesota and their employees to recover from the repercussions of the September 11
terrorist attacks."

2002: The Metropolitan Airports Commission agrees to refinance the underlying debt on the general obligation
revenue bonds. There are no changes to the agreements which have been in place since 1994.

2005 SEPTEMBER 14: Northwest Airlines voluntarily files for bankruptcy protection under Chapter 11 of the
U.S. Bankruptcy Code.

2005 TO 2007: Northwest faces a variety of difficulties: filing for bankruptcy, debt restructuring, layoffs,
a series of strikes, and labor negotiations. A Star Tribune article from January 16, 2007 states that
Northwest still owes $262 million on the $270 million it borrowed from the
Metropolitan Airports Commission in 1991.

2007 JANUARY: Northwest Airlines comes to an agreement with Mesaba Airlines' parent company to acquire the regional airline.

2007 MAY: The Metropolitan Airports Commission Board gives final approval to a $239 million aid deal
to Northwest Airlines.

2008 JANUARY: Northwest and Delta are reported to be considering a merger.

2008 APRIL 14: Northwest Airlines and Delta Air Lines announce their plan to merge which would create the
world's largest airline.

2008 OCTOBER 29: Northwest Airlines and Delta Air Lines formally merge within hours of getting approval to merge from the U.S. Justice Department.

2008 NOVEMBER: Delta reiterates pledge to repay the Metropolitan Airports Commission the $245 million that Northwest, as a Delta
subsidiary, owes on bond debt, but states they want to renegotiate the covenants agreed to in 1992 related to headquarter location,
hub location, and employment.

Legislative History

In May 1991, the Legislature passed House File 1655 (Laws of Minnesota 1991,
chapter 350),
which authorized the requirements for financing the construction of aircraft maintenance
and repair facilities in Minnesota.

Later the same year, the Legislative Commission on Planning and Fiscal
Policy held several meetings to give
final approval to the funding and construction of the maintenance facilities.

Berger, Annette. Northwest Airlines and the State of Minnesota:
Using Public-Private Partnerships to Manage Turbulent Environments.
Minneapolis: University of Minnesota, Strategic Management Research
Center, 1994. (HC107.M63 P835 1994)

Peterson, Jerrold M., Richard Lichty and Miguel Garcia. Executive
Summary of the Economic Impact Northwest Airlines Airbus Maintenance
Facility and Jet Engine Repair Facility on Minnesota, St. Louis County
and Duluth. Duluth, MN: University of Minnesota, Duluth, School
of Business and Economics, Bureau of Business and Economic Research,
1990. (HB74.8.W67 no. 90-5)

Report to
the Minnesota Legislature on the Minnesota-Northwest
Airlines Financing Agreement. St. Paul: Northwest Airlines, February
1999. (HE9803.N65 R37 1999)

Ruble, Kenneth D. Flight to the Top: How a Home Town Airline Made
History--And Keeps on Making It: The Absorbing 60-Year Story of Northwest
Airlines. New York: Viking Press, 1986. (HE9803.N65 R83 1986)

Venegas, Ernesto C. and Abigail McKenzie. The Cost-Effectiveness
of the Public Investment in the NWA Heavy Maintenance Facility and Related
Projects. St. Paul: Minnesota Department of Trade and Economic Development,
Information Analysis and Evaluation Unit, Business Development and Analysis
Division, 1991. (HC107.M63 P83 1991)